Professor Patrick Honohan:

We went into this with our eyes open because we knew there were going to be some cases that go, and end, down the repossession route. We also knew that engagement was a weak point. It is not a question of blame. It is merely a fact of life that engagement between distressed borrowers and their lenders was not happening. The question was asked whether we are going to allow the banks to treat the issue of a letter as satisfying what was proposed. The banks have to follow the procedures in the code of conduct on mortgage arrears before they issue that letter. They cannot merely state that they have another 500 to fill before the end of the month and they had better send out the letters. The banks must have gone through that process.

Although we would like to get the banks to do what they cannot do, if they cannot engage with the borrower, they cannot provide a restructuring, and we have had to allow them to do that. I would rather that it had not been so. I acknowledge it must be a frightening and upsetting experience to get such a letter from the bank, but this is not something we have created. This is something that was coming down the road. I think we all agree around here - I should not speak for the members of the committee - most analysts agree that getting to grips with the problem is essential, even if the process of getting to grips with it is initially unpleasant.